Home Capital Group has announced the pricing of of a private placement of residential mortgage-backed securities by Classic RMBS Trust, a securitization vehicle sponsored by Home Trust.
The securities are backed by a portfolio of near-prime, uninsured, residential mortgages and are comprised of A, B and Z tranches that aggregate $500 million.
It’s Home Trust’s first offering of Residential Mortgage-Backed Securities (RMBS).
The A Tranche of $425 million will be sold to accredited investors in Canada and the United States by a syndicate led by BofA Merrill Lynch and co-managed by BMO Capital Markets and RBC Capital Markets and in including all of the other major Canadian bank-owned investment dealers. They will bear interest at an annual rate of 3.011%.
The remaining $75 million of the Series 2019-1 Notes comprised of the B and Z Tranches will be taken up by Home Trust.
“Home Trust is pleased to launch this innovative product in both the Canadian and United States markets. Issuing RMBS, in addition to our existing base of customer deposits and CMHC sponsored securitization programs, represents an attractive funding option for us,” affirmed Brad Kotush, Executive Vice President and Chief Financial Officer at Home Capital. “We expect to be a serial issuer of these securities in the future. Further, we believe that by starting this sustainable program of RMBS issuance we may, with the support of other industry participants, help to establish a private RMBS market in Canada.”
Home Capital expects to close the private placement on September 27, 2019, subject to the satisfaction of customary closing conditions.